Do Changes in Regulation Affect Employment Duration in Temporary Work Agencies? (PGSE 7.1) Manfred Antoni & Elke J. Jahn,

8/4/2019 Do Changes in Regulation Affect Employment Duration in Temporary Work Agencies? (PGSE 7.1) Manfred Antoni &

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Center for European StudiesProgram for the Study of Germany and Europe Working Paper Series 07.1 (2007)

Do Changes in Regulation Affect Employment Duration

in Temporary Work Agencies?by

Manfred Antoni Elke J. Jahn*

Institute for Employment Research (IAB) Harvard University, IAB and IZA

Abstract

Over the past three decades Germany has repeatedly deregulated the law on temporary agencywork by stepwise increasing the maximum period for hiring-out employees and allowing tempo-rary work agencies to conclude fixed-term contracts. These reforms should have had an effect onemployment duration within temporary work agencies. Based on an informative administrativedata set we use a mixed proportional hazard rate model to examine whether employment dura-tion has changed in response to these reforms. We find that the repeated prolongation of themaximum period for hiring-out employees significantly increased average employment durationwhile the authorization of fixed-term contracts reduced employment tenure.Key words: temporary agency work, regulation, labor law, hazard rate model

JEL-Codes: C41, J23, J40, J48, K31

We thank Joachim Wolff, Corinna Kleinert, Andrew Martin, Britta Matthes, David Meskill, ClausSchnabel, Gesine Stephan, the participants of the Annual Congress of the Applied EconometricsAssociation 2006, and the Seminars at the Institute of Employment Research and the Center forEuropean Studies at Harvard University for their valuable and helpful comments on earlierdrafts of this paper. We gratefully acknowledge financial support by the Institute of EmploymentResearch Nuremberg, Germany.*Corresponding Author: Elke J Jahn, Minda de Gunzburg Center for European Studies at Harvard University,

27 Kirkland Street at Carbot Way, Cambridge MA 02138, USA, E-mail: [email protected].


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1. Introduction

Whether temporary agency work can improve the labor-market outcomes of the unemployed has re-cently become the subject of both policy and research interest. It is often argued that employment spellsin temporary work agencies increase workers human capital and provide the opportunity to gain workexperience. While being on assignment, temporary agency workers can develop labor-market contactsthat lead to stable employment or at least to longer-term employment (Jahn 2005, Houseman et al. 2003).In contrast to this view, it may be argued that human capital effects cannot be strong since temporary

work agencies primarily offer brief short-term low-skilled jobs that are often beneath the qualifications ofthe worker and that temporary agency employment provides no significant possibility for developingproductive job search networks (Segal/Sullivan 1997). Despite this objection Zijl et al. (2004) find evi-dence that temporary agency work in the Netherlands substantially reduces unemployment duration andincreases subsequent job stability. Studies by Amuedo-Dorantes et al. (2005) and Ichino et al. (2006) alsofind positive employment effects for workers in Spain and Italy, respectively, even though these resultsapply most notably for specific labor-market groups. The results by Autor and Houseman (2005) for theU.S. and Kvasnicka (2005) for Germany are less encouraging. Both studies find no strong support for thestepping-stone function of temporary agency work.

One reason for these rather mixed results might indeed be that employment duration in temporaryagency work, which is strongly regulated in most OECD countries by law, is rather short. Regulationsthat primarily affect the duration of temporary work agency contracts include permission to concludefixed-term contracts, the restriction on the number of renewals, and the maximum cumulated durationof temporary work contracts, as well as the maximum period for continuously hiring out employees toa single user firm. Even though most OECD countries limit the length or the number of renewals of atemporary agency work contract (OECD 2004), only Germany (until 2003), Italy, the Netherlands (until1999), Belgium, France, Luxembourg and Portugal limit the length of an assignment to a user firm (Ar-rowsmith 2006, Storrie 2002). Despite the continuing liberalization of the temporary help sector in mostOECD countries over the last two decades, up to now, there has been no research regarding the effect ofthese reforms on the job tenure within a single agency. Germany is an interesting case to analyze be-cause its temporary help sector is still one of the most regulated among the OECD countries and hassubstantially grown during the past decade.

Over the past three decades the German government has repeatedly amended the law on temporaryagency work. This process of deregulation started in 1985. One main focus of these reforms was thestepwise extension of the maximum period for hiring out employees. Furthermore, in the mid 1990s

temporary work agencies obtained permission to conclude fixed-term contracts with their employees.All reforms were designed on the one hand to increase employment stability within the temporarywork agency. On the other hand the deregulation was meant to increase flexibility and encourage firmsto make use of temporary agency workers rather than to internal adjustment instruments such as over-time when adjusting to variations in output demand. To some extent the strictness of the German regu-lation of temporary agency work might be responsible for the relatively small share of these workers intotal employment when compared to other European countries. Nevertheless these legal changesshould have had an effect on employment duration within temporary work agencies. In this paper amixed proportional hazard rate model is used to examine whether employment duration in the Ger-man temporary help sector has changed in response to these reforms. We do not address the questionas to whether these legal changes have had an effect on the stepping-stone function of temporaryagency work. The reason is that on average 30 percent of all temporary agency workers in Germanywere out of the labor force prior to entry in temporary work agencies. For these workers we cannot


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differentiate whether they accept agency work as a conscious choice to work in a dynamic environmentor as a means to finding permanent stable employment. Restricting our analysis to temporary agencyworkers who were previously unemployed would partly solve this problem but would heavily affectour results on employment duration.

The paper is organized as follows. The legal framework and the development of the temporary helpsector in Germany are described in Section 2. Section 3 outlines our main hypotheses. Section 4 de-scribes the data, discusses the explanatory variables and provides an explorative analysis. Section 5 is

devoted to our estimation strategy and the results. Section 6 presents the results of our sensitivityanalysis. Section 7 concludes.

2. Temporary agency work in Germany

Germany is suffering from a high and still rising unemployment rate, while economic growth is mod-est. In contrast, the German temporary help service industry has grown reasonably steadily for the lastthree decades. The number of temporary agency workers increased from 47,000 in 1980 to about598,000 in 2006. Despite an average annual growth rate of about 10 percent between 1980 and 2006 theshare of temporary agency workers reached only 1.5 percent of total employment in 2006. Never-theless, the actual labor-market flows give the temporary agency work sector an even greater impor-tance than any stock figure or its share of total employment would suggest. In 2005 on average about444,000 workers were employed by the temporary help service industry but 738,000 new temporarywork contracts were concluded and 724,000 terminated. Therefore the dynamics of this labor-marketsegment are hardly negligible.

In Germany, temporary agency work is regulated by the Labor Placement Act, which came into force in1972. Since then, agencies must register and receive authorization from the German Federal Employ-ment Agency. Legislation on temporary agency work has been amended repeatedly over subsequentyears. Some of the changes were tentative at the outset, see Table 1, p. 3.

In most countries temporary agency work is associated with a fixed-term contract. In contrast, Ger-many allowed temporary agency work at first only on the basis of an open ended contract. During pe-riods without assignment the temporary work agency is obliged to continue wage payments and con-tributions to the social security system. The maximum period of assignment to the user firm was lim-ited to three months. In this way, several successive assignments were to be combined in a long-lastingand stable employment relationship between the temporary worker and the temporary employmentagency. Furthermore, client firms should be prevented from substituting temps for regular employees.In order to prevent agencies from circumventing legal regulations concerning the requirement of anopen-ended contract, legislation on temporary agency work included a ban on re-employment and aban on synchronization. The ban on re-employment prohibits the agency from terminating the contractand then repeatedly re-employing the worker within a three-month period. This regulation permits aone-time termination and re-employment. However, this rule does not apply if the worker quits. Theban on synchronization requires that the employment contract exceed the length of the initial place-ment by at least 25 percent. This rule does not apply if the first assignment is followed by a second(short) assignment.


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Table 1: Major Reforms of the Labor Placement Act

Period RegulationExpected effemploymenture

from May 1, 19 Extension of the maximum period of assignment to a clienfrom 3 to 6 months until December 31, 1989, prolongation iuntil 1995

positive

from Jan 1, 199 Extension of the maximum period of assignment to afirm from 6 to 9 months until 2000, Elimination of the synchronization ban for hard-tounemployed assigned by the Federal Employment Agency

positive

from April 1, 1 Extension of the maximum period of assignment to afirm from 9 to 12 months, Acceptance of synchronization of initial assignment tent firm and employment contract with the temporary aworker, Acceptance of a one-time fixed-term contract withouttive reasons, Renewal of fixed-term-contracts with the same temagency worker is possible if the new contract follows the pr

contract immediately

negative

from Jan 1, 200 Extension of the maximum period of assignment to afirm from 12 to 24 months, Principle of equal treatment after 12 months

no effect

from Jan 1, 200 Elimination of the synchronization and re-employmeand the maximum period of assignment to a client firm, Liberalization of the ban of temporary agency workconstruction sector, Principle of equal treatment unless a collective agrespecifies otherwise

negative

Source: Jahn (2004)

In the following years, a number of legal reforms were passed. The maximum period of assignment wasexpanded from three to six months in 1985, from six to nine months in 1994 and again in 1997, this timefrom nine to twelve months. In 1997 fixed-term contracts and the synchronization of the first contract be-tween an agency and a temporary worker were allowed. A fixed-term contract could be prolonged or re-newed three times until total employment duration added up to twenty-four months. The option to re-new a fixed-term contract was later restricted by the Act on Part-Time and Fixed-Term Contracts in 2001.Accordingly, such contracts had to be open-ended after a first limited contract period unless the personalcharacteristics of the worker or objective reasons, such as the replacement of an employee on maternityleave, justified otherwise.


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In 2002 the maximum period of assignment was increased to twenty-four months. From the thirteenthmonth of an assignment on, the principle of equal treatment applied. The temporary agency workerhad the right to the same remuneration and working conditions as comparable employees directly em-ployed at the user firm. The law was again modified in 2003. 1 Since then, the temporary work agencyhas been allowed to assign an agency worker without any time limits. The ban on synchronization andthe ban on re-employment were abolished. However, fixed-term contracts continued to be regulated bythe provisions of the Act on Part-time and Fixed-term Contracts. At the same time, the rights of tempo-rary agency workers were further strengthened as the principle of equal treatment was in effect fromthe very first day of an assignment. The contracting parties may circumvent this principle if a sectoralcollective agreement applies. As a result numerous collective agreements were concluded in the tempo-rary work sector during 2003. Consequently, the principle of equal treatment has no practical effect formost temporary agency workers. In addition, the new legislation established a new instrument of ac-tive labor-market policy. Starting in 2003, the public employment service has used subsidized tempo-rary agency work as part of its job placement activities. The aim of the so-called Personnel-Service-Agencies is to get the unemployed back into regular work by transitions through temporary work.2

3. Hypotheses

We are able to examine the effects of the reforms of the Labor Placement Act since it came into effect,(see Section 4). Due to the stepwise prolongation of the maximum period of assignment we expect theduration of the assignment periods to have increased. As a consequence, employment duration with

the agency should have increased for the following reasons. In order to minimize periods without as-signment, and therefore staffing costs, temporary work agencies have an incentive to conclude employ-ment contracts that do not exceed the assignment period with the client firm. This strategy is first of allof benefit when there are fluctuations or uncertainties with respect to the demand for their services;secondly, if user firms request specialized workers for which the temporary work agency can find asubsequent assignment with similar qualification requirements only with difficulty; and, third, if userfirms occasionally request a large contingent of workers. In the latter case, a temporary work agencywill not search for suitable workers until a specific request is on-hand. Such workers will then be hiredspecifically for that request on a temporary basis.

Until 1997 it was the aim of the law to prevent the synchronization of the employment contract with thefirst assignment. Nevertheless, several legal loopholes allowed the temporary work agencies to circum-vent the principle of open-ended contracts. For instance, a temporary work agency could easily dismissand re-employ a worker once within the probationary period of six months. After an interruption of

three months re-employment was possible. Furthermore, a renewal of the employment contract wasallowed if the previous one had been terminated at the request of the worker herself. Moreover, the banon synchronization did not prohibit a very short assignment of e.g. one days duration after the pri-mary one. In doing so, the agencies could circumvent this regulation as well. Therefore, we hypothesizethat employment duration at the temporary work agency rarely exceeded the assignment periods.

1A detailed description of the development of the Labor Placement Act is given in Jahn (2006).2For details on the characteristics of this instrument of active labor-market policy, see Jahn/Ochel (2007).


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Employment protection legislation allows the employer to dismiss an employee during the probation-ary period with a notice period of two weeks without requiring justification. As a result, temporarywork agencies were essentially free to terminate all contracts within the trial period. Given that theprobationary period was equal to or longer than the maximum period of assignment prior to 1994,most temporary work agencies might have taken advantage of the opportunities of the employmentprotection legislation. Consequently, we expect that employment duration increased significantly dueto the reform in 1985.

In 1994 the government again raised the maximum period of assignment, this time from six to ninemonths. As soon as an employment contract exceeds the probationary period, the termination of a con-tract requires a justification. If the demand for a temporary worker is longer than six months, firms cancircumvent employment protection legislation by requesting a temp. Thus we propose that the demandfor temps should have increased. However, hiring a temp is expensive, due to an average mark-upfactor of 2.5 on gross wages. The advantage of temporary agency work for the client firm lies primarilyin the immediate adjustment to unexpected fluctuations in product demand (Bellmann 2004, Boock-mann/Hagen 2001). If a firm expects a long-term increase of additional staff, it may be more eco-nomical to directly recruit a temporary worker. As a rule of thumb the break-even point at which it ischeaper to hire a temporary worker is approximately six months (Schrder 1997). Thus, we supposethat the second reform had a positive effect on the employment duration with the agencies as well.However, we expect the impact to be less pronounced than that of the reform in 1985.

In 1997 the maximum period of assignment was extended to twelve months. Given that even today mostplacements still last less than six months, this deregulation is unlikely to have fundamentally increasedemployment duration (Bellmann et al. 2003, Kvasnicka 2004). In addition, the synchronization ban wasrelaxed by allowing temporary work agencies to conclude a fixed-term contract for the duration of thefirst assignment. Therefore, it is not likely that the third extension of the maximum period of assignmenthad a prolonging effect on employment duration. The overall effect of this reform on employment dura-tion might even have been negative.

The maximum period of assignment was again extended in 2002, this time from twelve to twenty-fourmonths. As mentioned before, if a client firm has a need for additional staff for such a long period itmay be cost minimizing to hire staff on a fixed-term basis instead of repeated recourse to temporaryagency work. The principle of equal treatment which applied from the thirteenth month of an assign-ment may also not have encouraged longer employment periods because it increased the cost of tem-porary staff. However, the overall effect of this reform remains ambiguous as well and we do not ex-

pect a noticeable effect on employment duration.The recent reform in 2003 nearly abolished all regulations and left the parameters of the employmentcontract subject to collective bargaining. Therefore we expect a pronounced reduction of employmentduration. Our hypotheses are summarized in Table 1.


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4. Data and definition of variables4.1 DataWe use an extended version of the IABS, which permits analyses at the individual level. 3 The IABS con-tains a two-percent random sample of all German employees registered with the social security system.Supplementary information on registered unemployment spells at the employment office is added tothe sample. Being of administrative nature the IABS provides longitudinal and high quality informationon the employment and unemployment history of employees. Temporary agency workers are identified

by an industry classification code, which allows us to identify those workers covered by the social se-curity system in professional temporary work agencies. Firms placing their employees only on a sporadicbasis (so-called mixed firms) can not be identified by this code. Therefore about 87 percent of all placedtemps in our sample are included in the analysis (Jahn/Wolf 2005). The missing information on tempo-rary agency workers employed in mixed firms has no effect on our results because the reforms of the La-bor Placement Act are likely to affect primarily the employment behavior of professional agencies.

Each employment and unemployment spell contains starting and ending date and provides accurateinformation on the timing of transitions from temporary agency work to another labor-market status.Using an inflow sample over the period 1980 to 2003 with censoring on December 2004, we can investi-gate and compare the effects of the five reforms between 1985 and 2003. For administrative reasons ap-proximately 85 percent of the employment spells are updated for 2004. We suppose that register infor-mation is particularly incomplete for new employment relationships. To avoid any distorting effects wetherefore excluded all spells starting in 2004. The reference to employment spells rather than workersimplies that temporary agency workers with multiple completed temporary agency spells within thesame firm or with another employer in a given period are included repeatedly. If a temporary agencyspell is followed by a new spell without interruption at the same employer employment duration ofthese two spells are added.

Nevertheless, the IABS also has disadvantages. First, temporary agency workers cannot be distin-guished from the permanent administrative staff of the agencies, which accounted for about 7 percentin 2003 (Jahn/Wolf 2005). Second, as the source of the employment data is social security administra-tion records, no information on the number and duration of placements and the client firm is available.Finally, as long as job seekers are not registered with the employment agency or in the social securitysystem, their employment history is interrupted. This implies that, although workers might be lookingfor a job, if they are not registered with the employment agency, the job seekers will be considered to beout of the labor force.

Information for East Germany is available since 1992. In order to investigate the effect of the reform in1985 as well we concentrate our analysis on West German workers. Furthermore, we restrict our analy-sis to full-time employees between the ages of fifteen and sixty-four. Contrary to the U.S., temporaryagency jobs in Germany rarely are second jobs. Due to lack of information on the number of hours

3The original IABS records data for the period 1975 to 2001. By adding employment spells of individuals in-cluded in the original data set administered by the Federal Employment Agency for 2002 to 2004, the re-form of 2003 can be analyzed as well. A description of an earlier version of the data set can be found inBender et al. (2000).


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worked, we exclude part-time employees, trainees, interns and home workers. In light of the low num-ber of cases we exclude temps in agriculture and mining as well.

4.2 Definition of variablesOur dependent variable is the employment duration within the temporary work agency. The five regula-tory regimes are coded as dummy variables. Employment contracts still in effect on the date of legalchange are attributed to the preceding period as we assume that the specific contract is influenced by the

legal framework in place while concluding the contract. To identify the reform effects we control for indi-vidual characteristics as well as for macroeconomic variables. As macroeconomic variables we use first,the real annual growth rate of the GDP, as the demand for temporary agency workers varies with the eco-nomic cycle, second, dummy variables at the regional level indicating the tightness of the regional labormarket, and finally, the average annual unemployment rate.4 All macroeconomic indicators are assignedto the end of a spell because we assume that the prolongation of a contract might depend on the actualmacroeconomic environment.

As socio-demographic variables, sex, age and nationality are available, but not information on familycomposition and marital status. To measure the skill level of temporary agency workers, we use thevariable education and vocational training. We define three categories: without vocational training,with vocational training, and with a university degree. In addition we coded potential work experienceas difference between age and time spent in the education system.

Although our data set provides rich information at the individual level, we assume that there is unob-served heterogeneity, such as in motivation and social skills, influencing individual job stability. Weuse recent employment history as a proxy to control for these characteristics. The IABS distinguishes be-tween periods of employment and registered unemployment. There may be no notification in the dataset for persons who have previously been outside the labor force, for pupils and students on vacationwork, persons currently fulfilling military service, self-employed, and jobseekers who are not regis-tered with the employment agency. We coded these persons, as well as workers without a notificationfor more than thirty days before entrance into temporary agency work, as not in the labor force. In ad-dition, we used the categories previously registered as unemployed, employed in temporary agencywork, and otherwise employed.

Employment duration in a temporary employment agency may not only be influenced by the regula-tory framework but also by other reasons for terminating employment. Our data set contains no infor-mation on whether the worker or the temporary employment agency terminated the employment rela-tionship. In particular, workers who have found a regular job after the temporary agency work spellmay have quit the temporary job. As a proxy for the termination decision of the worker, we include inour sensitivity analysis in Section 6 a variable indicating whether a worker has found a regular jobwithin thirty days after leaving the temporary work agency.

4A description of the estimated index of the regional labor-market tightness can be found in Blien et al.(2005). As the index is correlated with the regional unemployment rate we included the time varying an-nual unemployment rate for West Germany. We estimated our models with the lagged GDP growth rate aswell. But the lagged GDP variable is not significant. This is plausible because the increase in demand fortemporary agency workers is seen as a leading macroeconomic indicator.


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In addition, we control for the following job variables: occupational status is an indication of which as-signments a temporary agency worker may be best qualified for. We can distinguish between unskilledblue-collar workers, skilled blue-collar workers, and white-collar workers. It might be assumed thatthis classification corresponds closely to the level of education. However, the data only show a slightcorrelation between these two variables. A temporary agency worker may have vocational training, butdue to a previous period of long-term unemployment or lack of employment experience, he might beplaced as an unskilled blue-collar worker.

The IABS provides detailed information on the predominant occupation. Because the activities of a tem-porary agency worker may vary among assignments, we use a broad classification and differentiateamong six occupational groups: technical occupations with highly skilled workers (engineer, mathema-tician, and chemist), service, and clerical occupations. Manufacturing occupations are divided intothree variables for the following reason: in Germany there is some indication that especially the metalindustry (e.g., the automobile and aircraft industries) uses temps to circumvent the high wages bar-gained in this industry. Therefore we first of all pool typical occupations used in the metal industry inthe dummy variable manufacturing occupations in metal branch. According to our assumptionsthese workers are used as substitutes for regular workers and should therefore have longer employ-ment spells. Second, we aggregate laborers without specific occupation, who belong to the manufactur-ing occupations as well, in a separate dummy variable. 5 The remaining workers are aggregated in thevariable other manufacturing occupations. We expect that especially temps working as laborers and inservice jobs do not require long training periods and should therefore have short employment dura-

tions.In order to control for human capital we included the remuneration of the temporary agency workers.Wages are top-coded by the social security contribution ceiling. Since the remuneration of temporaryagency workers in Germany is very low and gross wage differentials between temporary agency work-ers and regular employees are approximately 41 percent (Jahn 2004), it is likely that this limit is of noconsequence for our analysis. A consistent consumer price index for the observation period is not avail-able. Therefore we deflated the wages by the GDP deflator. Spells with implausibly low daily wages andspells with wages above the social security contribution ceiling are excluded. We do not observewhether a worker holds an open-ended or a fixed-term contract.

To account for heterogeneity among the agencies, we included the size of the temporary help agency.The capability of a temporary work agency to deal with short-term demand shocks depends on thenumber of its client firms and on the extent of diversification between the clients economic branches.

Thus, there will most likely be a positive correlation between the firm size and the job stability in therespective firm.

Changes of covariates during a temporary agency spell are not reported as soon as they take place.Therefore, we use the covariate values at the beginning of a spell and assume that they are time invari-ant.

5One might expect that there is a close positive correlation between unskilled blue-collar workers andlaborers, but it turns out that the correlation is rather weak.


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4.3 Descriptive statisticsTable 2 provides some descriptive statistics of the inflow of all temporary agency workers given in ourdata from 1980 to 2003. differentiated by socio-economic characteristics. The corresponding medianemployment duration during the respective regulatory regimes can be found in Table 3. The data referto employment spells; right censored spells are included. We are able to identify 50,241 temporaryagency workers and 91,160 temporary agency work spells in total; 1,446 temporary agency spells arecensored. This leads to an average of 1.8 temporary agency work spells per person during our observa-

tion period and may be an indication that temporary work agencies indeed are able to terminate an em-ployment contract at the end of an assignment and to rehire a worker when a new client request is athand.

Table 2 shows that most temporary agency workers are male. This is true for our entire observation pe-riod. The proportion of non-German workers nearly doubled from 10 percent to 19 percent. Comparedto the share of non-German workers in overall employment, which amounted to 7 percent in 2003, eth-nic minorities are overrepresented in temporary agency work. With respect to the age distribution oftemporary agency workers, we find the well known international pattern (e.g. Storrie 2002). The agegroup below thirty-five is clearly overrepresented. However, their proportion decreased appreciably,from 74 percent between 1980 and 1984, to around 62 percent in 2003. This is primarily attributable tothe decline of the share of the age group from fifteen to twenty-four, which decreased from 40 percentto 28 percent during our analysis period. The fraction of workers aged forty-five to sixty-four nearlydoubled to 15 percent in 2003, but they are still underrepresented compared to their proportion of totalemployment (33 percent in 2003). Workers without vocational training, who usually are on short-termassignments, are overrepresented in temporary agency work compared to their share in overall em-ployment. Workers with a university degree are less likely to be in temporary agency work. Some62 percent of all temporary agency work spells in 2003 were done by unskilled blue-collar workers,while the fraction of skilled blue-collar workers had nearly halved since 1980. Two-thirds of all tempo-rary agency workers were employed in manufacturing or as laborers. This pattern has been stable since1980, even though service jobs have become more important in the last few years. In 2003 one amongfive temps had previously been out of the labor force and was probably only loosely attached to thelabor market. Due to the economic downturn beginning in 2001, the share of the previously unem-ployed increased markedly from nearly 29 percent between 1997 and 2001 to 43 percent in 2003.Whereas about 22 percent of temporary agency workers were previously otherwise employed before1985, this proportion declined to about 14 percent in 2003. The reform of 1997, which permitted fixed-term contracts and relaxed the synchronization ban, generated a sudden increase in temporary agency

workers previously employed in temporary agency work, from about 14 percent before 1997 to17 percent between 1997 and 2001, and even 23 percent after 2003. Table 2 shows that only 67 percent ofthe temporary agency workers who started their jobs in 2002 were still employed one month after entryand only 13 percent one year later. Obviously employment tenure in temporary agency work is rathershort.


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Table 2: Sample statistics of explanatory variables in %, West Germany

1980-1984 1985-1993 1994-1996 1997-2001 2002 2003

Sex (Male) 74.8 76.4 76.6 72.2 73.4 74.1Nationality (Non German) 9.9 14.9 24.8 24.1 19.3 18.7Age (Average in years) 29.4 29.9 30.6 31.1 31.7 32.5

15-24 39.9 37.6 32.3 32.8 30.8 28.025-34 33.7 34.9 38.2 34.6 33.4 34.3

35-44 18.1 17.8 19.0 20.4 22.6 22.545-64 8.3 9.8 10.5 12.3 13.1 15.1Education and vocational training

No vocational training 19.1 21.6 25.5 30.6 26.9 22.0Vocational training 78.4 75.8 70.3 64.6 68.3 73.6University degree 2.5 2.6 4.2 4.8 4.8 4.4

Occupational statusUnskilled blue-collar worker 38.8 45.1 54.1 60.9 63.7 62.2Skilled blue-collar worker 40.7 37.4 30.2 20.1 19.8 22.0White-collar worker 20.4 17.5 15.6 19.0 16.5 15.9

OccupationTechnical 3.0 2.5 1.8 1.6 1.2 1.9Manuf. other 19.4 12.5 10.3 8.6 8.4 9.0Manuf. metal 39.2 41.3 33.5 23.3 19.2 20.8Laborer 9.8 16.1 26.2 34.6 39.8 38.8

Service 10.9 12.6 14.7 15.6 17.7 17.3Clerical 17.7 15.0 13.4 16.3 13.7 12.2

Previous labor force statusUnemployed 24.2 23.8 31.2 28.6 33.5 42.8Regular employed 21.9 21.2 15.4 17.2 15.5 13.5Employed in TAW 12.4 14.3 13.7 17.3 21.1 23.2Not in the labor force 41.4 40.7 39.7 36.9 29.9 20.5

Regular employed after TAW 32.6 38.2 35.4 33.2 23.7 21.2Still in TAW spell after months in %

1 68 75 77 74 67 653 37 47 51 46 42 406 20 27 33 28 26 259 13 18 24 20 19 17

12 9 13 17 15 13 13

No. of spells 6,451 23,654 12,321 34,024 7,004 7,706No. of individuals 4,542 15,155 9,112 22,086 5,528 5,859

Source: IABS, Institute for Employment Research

Table 3 shows a median employment duration of two to three months and confirms that employmenttenure in temporary work agencies is indeed very short. These figures are roughly consistent with ear-lier findings in the Netherlands and other western European countries (Zijl et al. 2004, Dekker/Kaiser2000). Lane et al. (2003) show that temporary agency workers in the U.S. had a median tenure of sixmonths, Segal/Sullivan (1997) estimate an average of about six months as well. Moreover, Table 3shows that employment tenure increased with the maximum period for hiring out employees until1994-96. This is fully in line with our hypothesis. After the marked deregulation in 1997 and 2003 themedian tenure decreased again. Note that we find this pattern for all socio-economic variables.


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Table 3: Median employment duration in months, West Germany

1980-1984 1985-1993 1994-1996 1997-2001 2002 2003

Total 2.0 2.8 3.2 2.7 2.2 2.1Sex

Male 1.9 2.7 3.2 2.7 2.2 2.1Female 2.4 3.1 3.4 2.6 2.2 2.1

Nationality

German 2.0 2.8 3.4 2.9 2.3 2.2Foreign 2.5 2.7 2.7 2.2 1.9 1.7Age

15-24 1.8 2.1 2.3 1.9 1.8 1.725-34 2.0 3.0 3.3 2.8 2.2 2.035-44 2.4 3.4 4.4 3.5 2.5 2.545-64 2.5 4.0 4.9 4.1 3.1 2.7

Education and vocational trainingNo vocational training 1.5 1.8 2.3 1.9 1.6 1.6Vocational training 2.1 3.1 3.6 3.1 2.5 2.2University degree 3.4 4.1 4.4 4.0 2.9 3.5

Occupational statusUnskilled blue-collar worker 1.5 1.9 2.4 2.0 1.8 1.7Skilled blue-collar worker 2.2 3.4 4.3 3.9 2.8 2.7White-collar worker 3.1 4.8 5.4 4.1 4.1 3.6

OccupationTechnical 3.8 6.1 7.3 7.7 6.4 8.8Manuf. other 1.5 2.2 2.7 2.4 2.0 1.7Manuf. metal 2.2 3.2 4.3 3.5 2.8 2.6Laborer 1.6 1.8 2.2 2.0 1.7 1.7Service 1.5 1.9 2.4 2.3 2.1 1.9Clerical 3.0 4.4 5.2 4.0 4.1 3.4

Previous labor force statusUnemployed 2.7 3.5 4.2 3.7 2.3 2.1Regular employed 2.2 3.1 4.0 3.0 2.8 3.6Employed in TAW 1.9 2.7 3.1 2.5 2.1 1.9Not in the labor force 1.7 2.3 2.5 2.0 2.0 1.9

Regular employed after TAW 2.6 3.8 4.9 4.0 3.5 2.9No. of spells 6,451 23,654 12,321 34,024 7,004 7,706

No. of individuals 4,542 15,155 9,112 22,086 5,528 5,859Source:IABS, Institute for Employment Research

5. Empirical strategy and estimation results5.1 Econometric modelIn order to identify the reform effects, a Difference in Difference approach could be an estimation strat-egy. The purpose is to estimate the causal effect of an intervention by comparing differences in out-comes before and after the change for groups affected by the intervention (temporary agency workers)to the same difference for unaffected groups (regular workers). In this case we have to assume that hir-ing and firing of regular workers and therefore their employment tenure is not affected by the changesin the law. But this assumption is too strong because an increasing share of client firms uses temporaryagency workers among other reasons to screen workers and to circumvent employment protection leg-


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islation for regular workers (Autor 2003, CIETT 2002, Houseman et al 2003). In an environment withstrict regulation of temporary agency work these workers would probably have been hired on a regularcontract. An indication that client firms have indeed changed their hiring strategy at the margin is theincreasing demand for temporary agency workers in Germany since 1980 which goes hand in handwith the deregulation of the Labor Placement Act.

A second estimation strategy to estimate the effect of the legal changes on employment dynamics intemporary agency work is to adopt a hazard rate model.6 In order to identify the effects of the changes

in the law we included macroeconomic covariates as well as individual covariates as described in Sec-tion 4. In our context, the model specifies the exit rate out of temporary agency work. Since our longi-tudinal data set contains daily flow information on employment episodes we use a continuous timemodel. We do not differentiate between various destination states and therefore adopt a single riskframework. The hazard rate ( )th is defined as the rate at which an individual exits from a state, giventhe individual survived there until time t. For the transition out of temporary agency work we use amixed proportional hazard model for multiple-spell data (van den Berg 2001, Hamerle 1989). The vec-tor of explanatory variables is denoted by x and the baseline hazard by ( )t . The influence of the ob-served characteristics is given by

(1) ( ) ( )'exp0 xxh = .

To control for neglected covariates not given in our data set we introduce an unobserved heterogeneity

term denoted by . Thus, the mixed proportional hazard model is denoted by

(2) ( ) ( ) ( ) = xhtxth 0, .

The multiplicative heterogeneity term is assumed to be constant across different spells of a given in-dividual and to follow the Gamma distribution as proposed in Abbring/van den Berg (2006). For thesake of identifiability we assume the unobserved heterogeneity to have a mean of one and a finite vari-ance . As is unobservable, it cannot be estimated by the data. It is integrated out and only the vari-ance is estimated and given in our results.7

For the baseline hazard rate we adopt a piecewise constant exponential model (see Blossfeld/Rohwer2002). To gain flexibility we split analysis time during the first year of each episode into weekly inter-vals. Within each interval, the baseline hazard is constant as it follows the exponential distribution.From the thirteenth month on we split the time axis into monthly intervals as the number of observa-tions lasting longer than one year is too little to continue the weekly intervals. The splitting of the timeaxis can be described as follows:

(3)L


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Assuming that the point in time =+1L and Ll ,...,1= , we get L intervals with

(4) { }1| +


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going contracts, which were concluded under the former legal regime and re-employed workers after-wards.

As expected the transition rate after the reform of 2003, which abandoned nearly all regulations and leftregulation of the temporary help sector subject to collective agreements, increased markedly. This re-sult is expected and confirms the hypothesis in Section 3.

Table 4: Exit rates of temporary agency workers, West Germany

Model 1 Model 2a) Model 3 b) Model 4 c) Model 5 d)

Reform period (ref.: 1980 84)1985 1994 0.723*** 0.796*** 0.733*** 0.724*** 0.730***

(-16.48) (-15.72) (-16.27) (-16.46) (-15.99)1994 03/1997 0.660*** 0.751*** 0.668*** 0.660*** 0.665***

(-17.44) (-16.32) (-17.33) (-17.42) (-17.14)04/1997-2001 0.690*** 0.816*** 0.674*** 0.690*** 0.690***

(-17.45) (-13.43) (-19.15) (-17.44) (-17.50)2002 0.790*** 0.934*** 0.742*** 0.790*** 0.778***

(-9.26) (-3.62) (-12.03) (-9.26) (-9.82)2003 0.872*** 1.042** 0.814*** 0.872*** 0.848***

(-5.24) (2.14) (-8.13) (-5.23) (-6.29)Sex (male) 1.070*** 1.133*** 1.076*** 1.070*** 1.055***

(4.98) (13.41) (5.61) (5.00) (3.95)

Nationality (foreign) 1.106*** 1.111*** 1.096*** 1.134*** 1.094***(7.57) (12.18) (7.19) (5.75) (6.76)Potential work experience 0.973*** 0.985*** 0.976*** 0.973***

(-14.59) (-11.69) (-13.80) (-14.53)Age (ref.: 15-24)

25-34 0.917***(-6.29)

35-44 0.776***(-16.00)

45-64 0.706***(-18.39)

Education (ref.: no voc. traininVocational training 0.991 1.094*** 0.990 0.988 1.009

(-0.72) (9.99) (-0.81) (-0.93) (0.72)University degree 1.149*** 1.276*** 1.138*** 1.128*** 1.273***

(4.87) (12.02) (4.68) (3.80) (8.34)Fraction: employees with unigree

0.805** 0.912 0.880 0.811** 0.850*

(-2.56) (-1.41) (-1.54) (-2.47) (-1.93)Log. deflated daily wage 0.327*** 0.334*** 0.337*** 0.327*** 0.334***

(-78.17) (-98.60) (-77.52) (-78.07) (-76.62)Occupational(ref.: white-collar worker)

Unskilled blue-collar worke 1.212*** 1.187*** 1.189*** 1.214*** 1.195***(6.18) (7.19) (5.70) (6.17) (5.73)

Skilled blue-collar worker 1.125*** 1.094*** 1.114*** 1.121*** 1.109***

(3.66) (3.63) (3.44) (3.54)(3.23)


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Occupation (ref.: manuf. other)Technical 0.718*** 0.729*** 0.734*** 0.720*** 0.722***

(-7.59) (-9.45) (-7.25) (-7.54) (-7.47)Manuf. metal 0.869*** 0.870*** 0.876*** 0.869*** 0.872***

(-8.18) (-11.25) (-8.00) (-8.20) (-8.02)Laborer 0.911*** 0.902*** 0.918*** 0.910*** 0.918***

(-5.43) (-8.00) (-5.09) (-5.45) (-4.98)Service 0.904*** 0.882*** 0.908*** 0.903*** 0.912***

(-5.38) (-8.92) (-5.25) (-5.42) (-4.92)Clerical 0.862*** 0.864*** 0.864*** 0.862*** 0.882***(-4.36) (-5.66) (-4.42) (-4.36) (-3.69)

Previous labor force(ref.: unemployed)

Otherwise employed 1.030** 1.031*** 1.036*** 1.030** 1.051***(2.27) (3.01) (2.79) (2.27) (3.85)

Employed in TAW 1.146*** 1.274*** 1.161*** 1.146*** 1.167***(10.46) (22.98) (11.61) (10.46) (11.83)

Out of the labor force 1.156*** 1.172*** 1.157*** 1.156*** 1.136***(13.15) (18.38) (13.48) (13.13) (9.94)

Termination by the employee 0.797***(-24.50)

Firm size 0.999*** 0.999*** 0.999*** 0.999*** 0.999***(-18.68) (-23.60) (-18.42) (-18.65) (-18.25)

Fraction: employees w. univ. d 0.805** 0.912 0.880 0.811** 0.850*(-2.56) (-1.41) (-1.54) (-2.47) (-1.93)

Growth of GDP (West) 1.022*** 1.025*** 1.018*** 1.022*** 1.026***(7.53) (10.90) (6.37) (7.53) (8.88)

Unemployment rate (West) 0.941*** 0.911*** 0.948*** 0.942*** 0.942***(-14.25) (-27.90) (-12.74) (-14.22) (-14.21)

InteractionsUniv. degree * unworker 1.085

(1.33)Foreign * unskilled worker 0.963

(-1.47)Previously out of theforce * age (15-24) 1.075***

(3.92)ln() 0.405*** 0.340*** 0.405*** 0.404***

(-63.53) (-67.17) (-63.52) (-63.91)AIC 110,670 125,140 105,527 110,671 110,220No. of observations 91,160 91,160 90,469 91,160 91,160

Source: IABS, Institute for Employment Research Note:a) model without control for unobserved heterogeneity, b)model excluding observations lasting longer than 5 years, c) model including interactions, d) model with agegroups and termination by the employee.Further controls: potential work experience squared, firms size squared, regional dummies. z-statistics in brack-ets. ***, **, * denote significance at the .01, .05, .10 levels, respectively.

Figure 1 shows the predicted survival functions based on Model 1. In the respective graphs consecutivelegal regimes are compared over the first 365 days of employment duration in temporary agency work.For comparison we depict the survival function of the reference period as well. As indicated by the


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estimation results the strongest prolongation occurred after the reform of 1985. The highest employ-ment duration and the initial decline following 1997 are reflected in the second graph. Finally, the sur-vival probabilities of contracts concluded in 2003 show only small differences to those concluded be-tween 1980 and 1984.

Figure 1: Predicted survival functions for an average individual

0

.2

.4

.6

.8

1

Survivalfunction

0 50 100 150 200 250 300 350Durationin days

1 98 0- 19 84 1 98 5- 19 93

0

.2

.4

.6

.8

1

Survivalfunction

0 50 100 150 200 250 300 350Duration indays

1980-1984 1985-1993 1994-1996

0

.2

.4

.6

.8

1

Survivalfunction

0 50 100 150 200 250 300 350Durationin days

1980-1984 1994-1996 1997-2001

0

.2

.4

.6

.8

1

Survivalfunction

0 50 100 150 200 250 300 350Duration indays

1980-1984 1997-2001 2002

0

.2

.4

.6

.8

1

Survivalfunction

0 50 100 150 200 250 300 350Durationin days

1980-1984 2002 2003

Source: IABS, Institute for Employment Research5.3 Covariate effects

The transition rates out of temporary agency work for male workers do significantly differ from that offemale workers. Model 1 in Table 4 shows that the transition rate out of temporary agency work forethnic minorities is higher. One reason might be that they are not well informed about their legal rightsand it is therefore easier for the agencies to circumvent legal regulations. This presumption is con-firmed if we calculate the number of consecutive contracts for ethnic majorities (1.9), which is higherthan that of German workers (1.8). Potential work experience increases employment duration in tem-porary agency firms. It is reasonable to expect that temporary workers with long job experience will beeasier to place than new entrants, who intend to gain their initial work experience in temporary agencywork.

One might expect that workers with higher qualification levels would be assigned to positions that re-quire a longer time to become fully proficient at the job at hand. In this case the length of an assignmentand thus the duration of the contract period should increase. The estimation does not confirm our expec-tation that vocational training lengthens duration of employment as the coefficient is not significant. Atfirst sight, it may be surprising that employment duration of temporary workers with a university degreeis shorter than that of the reference group. This initially unexpected result is explained as follows: thetemporary agency work market in Germany is highly segmented. Large temporary work agencies pre-dominantly place unskilled and seasonal workers. However, some temporary work agencies specialize inparticular industry sectors and specific market niches that primarily require university graduates. Thisincludes specifically skilled workers in information technology, engineers and, most recently, also econo-mists, who process complete projects with a limited time horizon. We hypothesize that such specializedtemporary work agencies will provide employment contracts of durations that are well above average. In

Formatted: Bullets and Numb


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order to account for this effect, we used the variable fraction of employees with a university degree in atemporary work agency. The use of this variable is based on the hypothesis that temporary agency work-ers with university degrees employed in temporary work agencies of this type are more likely to obtainassignments that match their qualification. The results show that the hazard ratio of this variable indeedindicates a significant prolonging effect. However, university graduates with degrees, for example, inphilosophy or performing arts who work for non-specialized temporary work agencies at levels belowtheir qualification must accept a shorter employment spell.

The results in Table 4 indicate that the duration of a temporary agency job does depend on previouslabor-force status. The reference group is the prior unemployed. Employment duration for workerscoming from regular employment is shorter. Probably they bridge the gap between two jobs. For work-ers with immediate prior experience in temporary work agencies we would expect a longer employ-ment spell. But the estimation results show that employment duration is shorter. One reason might bethat temps who have repeatedly accepted temporary agency jobs have developed productive job searchnetworks and quit as soon as they find regular employment. The employment duration of temps com-ing from out of the labor force is significantly lower. The reason may be that they are only loosely at-tached to the labor market.

Table 5: Predicted survival probabilities in %, West Germany

1980-1984 1985-1993 1994-1996 1997-2001 2002 2003

Average persona

1 month 69.5 76.9 78.7 77.8 75.1 72.93 months 31.3 43.1 46.4 44.8 39.9 36.36 months 10.4 19.5 22.5 21.0 16.8 13.912 months 1.4 4.5 5.8 5.1 3.3 2.3

Female1 month 70.8 77.9 79.6 78.8 76.1 74.03 months 33.1 45.0 48.2 46.6 41.8 38.26 months 11.7 21.1 24.2 22.7 18.3 15.412 months 1.7 5.2 6.7 5.9 4.0 2.8

Foreign1 month 67.2 75.0 76.9 76.0 73.1 70.73 months 28.0 39.8 43.2 41.5 36.6 33.06 months 8.4 16.7 19.5 18.1 14.2 11.612 months 0.9 3.3 4.5 3.9 2.4 1.6

Clerical occupation1 month 70.7 77.8 79.5 78.7 76.0 73.93 months 33.0 44.8 48.1 46.5 41.6 38.06 months 11.6 21.0 24.1 22.6 18.2 15.212 months 1.6 5.1 6.6 5.9 3.9 2.8

Source: IABS, Institute for Employment Research; Note:a) The average person is calculated by the sample averagesgiven in the period 1980 to 1984.

In order to include the heterogeneity of the temporary work agencies, beyond the fraction of universitygraduates among its employees, our regressions include firm size. Large temporary work agencies canpool jobs across client firms more easily. Therefore they can offer workers more stable employment,even if specific assignments with client firms are temporary. The employment duration indeed in-creases with the size of the agency. The exit rates out of temporary work are sensitive to business cycle


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fluctuations and are higher in tight labor markets with low unemployment rates. This result is in linewith the study of Zijl et al. (2004) and may be attributed to a stepping-stone effect.

Table 5 shows the predicted survival probabilities for an average person in our data set. The probabilityof staying employed in an agency for a given time rises until 1997. From that year on survival prob-abilities start to decline again. We also simulated this development for females, for foreigners and forworkers with a clerical occupation. As already noted before, female workers or those with a clericaloccupation experience more stable employment relationships in agency work. The reverse is true for

foreign agency workers.

6. Sensitivity analysis

In order to investigate the effect of different model specifications we perform a number of sensitivityanalyses (see Models 2 to 5 in Table 4). In all specifications the effects of the reforms are robust. Model 2tests whether we receive different results if unobserved heterogeneity is ignored. Table 4 shows thatthe estimations of the last two reform dummies change. Compared to Model 1, the hazard ratios of therespective reform periods increase. This is an indication that we have indeed to deal with unobservedheterogeneity of the workers and that hazard rates are overestimated if unobserved heterogeneity isneglected. The decision to include an unobserved heterogeneity term is also supported by the lowerAkaike information criterion (AIC) and the significant heterogeneity term in column 1 (Cleves et al.2002).

Our data set includes the permanent administrative staff. However, we assume that their employmentduration is not affected by the reforms and that their contract duration should on average last longerthan those of the temporary staff. In Model 3 we therefore exclude observations lasting longer than fiveyears. Again, the hazard ratios change only in size.

The specification is extended by interaction terms in Model 4. As a proxy for highly qualified workerswho are on assignments that are well below their educational level an interaction term for universitydegree and the occupational status unskilled worker is included. This dummy yields no significant ef-fect. Furthermore, we presume that in particular unskilled foreign workers have a weak labor-marketposition, see Section 4, and should therefore have shorter employment duration. To test this hypothesiswe included an interaction term for this group as well. Again, our estimations show no significant ef-fect.

One shortcoming of our administrative data set is the lack of information about the reasons for job ter-

minations. Therefore we cannot identify whether a temp has been dismissed or has quit the job. How-ever, the reform effects we analyze are assumed to influence the behavior of the temporary work agen-cies and not that of their employees. To circumvent this shortcoming Model 5 assumes that a termina-tion by a temp occurred if we observe a direct transition into regular employment. Model 5 replaces thepotential work experience by age groups as well. The reason is that younger temps are often recruitedamong students or pupils, who use agency jobs to bridge the vacation gap. As they intend to end theiremployment relationship after a predefined short time period anyway, we assume that regulatory


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changes hardly affect their employment duration. The results of Model 5 support that assumption as allthe age groups above twenty-four yield significantly lower hazard rates.

To test whether the results are robust with respect to the chosen time intervals we estimated Model 1with monthly and two-weekly intervals respectively instead of weekly intervals. These estimations (notpresented in Table 4) confirm that the reform effects do not change due to different time intervals.8

7. Conclusions

Most OECD countries liberalized the regulation of temporary agency employment over the last two dec-ades. To our knowledge, up to now there has been neither national nor international research regard-ing the changes in employment duration of temporary agency work accompanying these changes inthe law. We used a mixed proportional hazard rate model to estimate the changes following the re-forms of the Labor Placement Act in Germany since 1980. The stepwise deregulation of the legal frame-work governing temporary agency work in Germany was intended to let firms respond more quicklyto changes in output demand. The rapid growth of the temporary help sector in Germany has raisedconcerns because many view temporary agency jobs as bad jobs. Our first key finding is that laborturnover in the temporary work agency sector is indeed remarkably high. There is also some indicationthat temporary agency jobs increasingly lead to a repeating cycle between temporary jobs. Conse-quently, employment in temporary work agencies normally is only a short transitory period in the em-ployment histories of the workers. It offers employment options particularly for male workers and dis-advantaged groups, notably for poorly qualified workers, unemployed persons, foreigners, and youngworkers and is primarily used in manufacturing.

Our second key finding is that there are sizeable changes in employment duration of temporary agencyworkers after the changes in the Labor Placement Act, which are in line with our theoretical predic-tions. As expected, the first two reforms, which increased the maximum period of assignment, havehad a positive impact on the length of employment in temporary work agencies. When fixed-term con-tracts were allowed and the synchronization ban was relaxed in 1997 average employment durationdropped markedly. Obviously, agencies shifted the risk of not being able to place a worker in a userfirm to the temporary agency worker or the unemployment insurance system. This may have increasedthe precarious situation of temporary agency workers that many opponents feared. On the other handthe change in the law may explain why temporary agency work has increased in Germany as much asit has since 1997. Obviously, client firms have responded to the stimuli by increasing their demand fortemporary agency workers. But we do not know yet whether these are additional jobs or whether firms

have substituted regular with flexible jobs. Surprisingly, the reform in 2002, which introduced the prin-ciple of equal pay and increased the maximum length of assignment, was followed by a reduction inemployment duration as well. We presume that this is an anticipation effect resulting from the most re-cent reform that came into effect in 2003 and left regulation of the temporary help sector subject to col-lective agreements. The exit rates out of temporary agency work for workers with a relatively weaklabor-market position, such as non-German workers, low skilled workers with no education, and theyoungest age group, are very high. The previous state in the labor market has a significant effect on em-

8The results are available on request.


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ployment duration. Workers who prior to temporary agency work were not in the labor force leave thetemporary help sector more quickly than workers coming from employment or unemployment.

The evidence from our study provides insights into the potential important role of different kinds ofregulation on the employment stability within the temporary help sector and we believe the subjectwarrants further research. One important question is whether the changes in the law have affected thetransition of unemployed workers into regular work. We leave this issue, for the moment, to furtherresearch.


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Documents

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